Sun Micro ends streak of losses; revenue up 7%

Sun Microsystems Inc. returned to solid profitability Tuesday after years of red ink, easily exceeding Wall Street’s tepid expectations thanks to the growing popularity of its corporate computers and its newest operating system.

But many analysts remained wary of the notoriously cyclical company. They say Wall Street will be convinced of Sun’s turnaround only when it posts healthy profit for at least two consecutive quarters.

Sun also said Tuesday that KKR Private Equity Investors, the public fund of private equity firm Kohlberg Kravis Roberts & Co., would get a seat on Sun’s board in exchange for a $700-million investment in the company.

For its fiscal second quarter, which ended Dec. 31, the server and software maker earned $126 million, or 3 cents a share, up from a net loss of $223 million, or 7 cents, a year earlier. Revenue rose 7% to $3.57 billion.

Excluding special expenses, such as $58 million in stock-based compensation charges and $26 million in restructuring costs, Sun earned $148 million, or 4 cents a share.

On that basis, analysts surveyed by Thomson Financial had expected the Santa Clara, Calif.-based company to earn $26.4 million, or 1 cent a share, on sales of $3.52 billion.

Sun stock gained 47 cents in after-hours trading. Before the report came out, shares dropped 9 cents to close at $5.66.